UK Government

Watch Manager Jim Green: Hidden Economy under Scrutiny

News   •   Jan 06, 2010 11:23 GMT

New ways to stop people from entering the hidden economy and to help people out of it will be examined by a newly formed group of experts.

The Hidden Economy Advisory Group is formed from independent experts and chaired by HM Revenue & Customs (HMRC) to take a fresh look at what can be done to reduce the hidden economy.

Mike Eland, chair of the group and Director General of Enforcement and Compliance in HMRC said:

“We estimate that the hidden economy contributes to around 7.5% of the net tax gap, which means we could be losing in the region of £3bn a year from people who are living and working in the hidden economy. They also gain an unfair competitive advantage over businesses that pay their taxes. This new group of experts with a variety of experience will identify new practical steps to tackle this problem.”

“By understanding the behaviours, attitudes and circumstances of those working in the hidden economy, we will be able to identify the right mix of incentives and deterrence to encourage them to move into the formal economy and stay there – even when times are tough”.

The members of the Hidden Economy Advisory Group are:

  • Professor John Hasseldine, Tax Research Institute, Nottingham University Business School
  • Paul Webley, Professor of Economic Psychology, School of Oriental and African Studies
  • Andrew Cave, Head of Policy, Federation of Small Business
  • Aaron Barbour, Head of linksUK (interim), Community Links
  • Representatives from the Department for Work and Pensions and Local Government will attend the Advisory Group as observers.

The Advisory Group will

  • examine the main barriers to someone in the hidden economy joining the formal economy, and recommend workable measures that might be introduced to remove or reduce those barriers
  • examine the motivations and behaviours that lead people to join the hidden economy, and make recommendations as to what HMRC can do to prevent and stop this.

The new Hidden Economy Advisory Group was announced as part of the 2009 Pre-Budget Report. It will present initial findings in time for Budget 2010.

Issued by HM Revenue & Customs Press Office

NAT 03/10

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